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Allocative efficiency

Total questions: 47

Worksheet time: 25mins

Name
Class
Date
1.
The degree to which tax falls on a particular person or group
a)
Surplus
b)
Tax incidence
c)
Deadweight loss
d)
Elasticity
2.
Efficiency loss is another term for...
a)
Deadweight loss
b)
Consumer surplus
c)
Producer surplus
d)
Elasticity
3.
The maximum price a consumer is willing to pay for a product and the actual price that they do pay
a)
Consumer surplus
b)
Producer surplus
c)
Deadweight loss
d)
Allocative Efficiency
4.
Reductions of combined consumer and producer surplus
a)
Deadweight loss
b)
Elasticity
c)
Tax incidence
d)
Surplus
5.
The impact that a change in a product's price has on its relative expensiveness and on the quantity demanded
a)
income effect
b)
substitution effect
c)
deadweight loss
d)
consumer surplus
6.
A consumer's demand curve for a product is downsloping because...
a)
total utility falls below marginal utility as more of a product is consumed
b)
marginal utility diminishes as more of a product is consumed
c)
the income and substitution effects precisely offset eachother
d)
time becomes less valuable as more of a product is consumed
7.
If there is a tax of $60 and the consumer burden is $10 what is the burden on the producers?
a)
$50
b)
$60
c)
$10
d)
There is not enough information
8.
Jennifer buys a piece of costume jewelry for $33 for which she was willing to pay $42.  The minimum acceptable price to the seller, Nathan, was $30.  Jennifer experiences...
a)
A consumer surplus of $12 and Nathan experiences a producer surplus of $3
b)
A producer surplus of $9 and Nathan experiences a consumer surplus of $3
c)
A consumer surplus of $9 and Nathan experiences a producer surplus of $3
d)
A producer surplus of $9 and Nathan experiences a consumer surplus of $12
9.
Graphically, if the supply and demand curves are linear, consumer surplus is measured as the triangle...
a)
under the demand curve and below the actual price
b)
under the demand curve and above the actual price
c)
above the supply curve and above the actual price
d)
above the supply curve and below the actual price
10.
Allocative efficiency occurs only at that output where...
a)
marginal benefit exceeds marginal cost by the greatest amount
b)
consumer surplus exceeds producer surplus by the greatest amount
c)
the combined amounts of consumer surplus and producer surplus are maximized
d)
the areas of consumer and producer surplus are equal
11.
A deadweight loss declines in size when a unit of output is produced for which...
a)
marginal cost exceeds marginal benefit
b)
maximum willingness to pay exceeds minimum acceptable price
c)
consumer surplus exceeds producer surplus
d)
producer surplus exceeds consumer surplus
12.
The first Pepsi yields Craig 18 units of utility and the second yields him an additional 12 units of utility. His total utility from three Pepsis is 38 units of utility. The marginal utility of the third Pepsi is
a)
26 untils
b)
6 utils
c)
8 utils
d)
38 utils
13.
a)

Per-Unit Tax

b)

Per-Unit Subsidy

c)

Income Tax

d)

Income Subsidy

14.
a)

Consumer Surplus

b)

Producer Surplus

c)

Total Surplus

d)

All of the Above

15.
a)

Consumer Surplus

b)

Producer Surplus

c)

Tax Revenue

d)

Deadweight Loss

16.
a)

Consumer Surplus

b)

Producer Surplus

c)

Tax Revenue

d)

Deadweight Loss

17.
a)

Consumer Surplus

b)

Producer Surplus

c)

Tax Revenue

d)

Deadweight Loss

18.
a)

Consumer Surplus

b)

Producer Surplus

c)

Tax Revenue

d)

Deadweight Loss

19.
a)

Producers

b)

Consumers

c)

Tax Payers

d)

Subsidy Lovers

20.
a)

Total Surplus

b)

Bonus Profit

c)

Deadweight Loss

d)

Benefits to Suppliers

21.

The diagram shows the price and quantity of pizzas. Calculate the total value of the 5 pizzas.

a)

$40

b)

$50

c)

$12

d)

Not enough information

22.

Consumer surplus is ________

a)

The difference between what a producer is prepared to sell at and what they actually sell at

b)

Total benefits - total costs

c)

The difference between what a consumer is prepared to pay and what they actually pay

d)

Total costs - total benefits

23.

Producer surplus is ________

a)

The difference between what a producer is prepared to sell at and what they actually sell at

b)

Total benefits - total costs

c)

The difference between what a consumer is prepared to pay and what they actually pay

d)

Total costs - total benefits

24.

The diagram shows the demand for pizza. What is the consumer surplus on the first pizza?

a)

$5

b)

$12

c)

$3

d)

$4

25.

The diagram shows the demand for pizza. What is the consumer surplus on the last pizza?

a)

$0

b)

$12

c)

$3

d)

$4

26.

When market price falls, what happens?

a)

Consumer surplus decreases

b)

Consumer surplus increases

c)

Demand shifts right

d)

Demand shifts left

27.

Economic efficiency occurs when ___________

a)

Consumer surplus is greater than producer surplus

b)

Producer surplus is greater than Consumer surplus

c)

Total surplus is maximised

d)

The government levies a tax on the good

28.

When total surplus is reduced because of either under or overproduction, it is referred to as _______

a)

Marginal cost

b)

Market efficiency

c)

Equilibrium

d)

A deadweight loss

29.

The government introduces a new law to prevent the price of beef from rising. Which of the following would happen?

a)

Increase in deadweight loss

b)

Decrease in deadweight loss

c)

Demand would increase

d)

Demand would decrease

30.

The war in Ukraine leads to a decrease in supply of fuel. Which of the following would happen?

a)

Decrease in deadweight loss

b)

Increase in deadweight loss

c)

Increase in demand

d)

Decrease in supply

31.

A cap is introduced on the number of taxi licenses. What happens in the market? (more than one answer)

a)

Shortage of supply

b)

Supply surplus

c)

Decrease in price

d)

Increase in price

32.

A _________ is a legislated maximum price that sellers are allowed to charge in the market.

a)

Equilibrium price

b)

Price ceiling

c)

Price floor

d)

Deadweight loss

33.

A price ceiling results in ________

a)

A surplus because Qs exceeds Qd

b)

A shortage because Qd exceeds Qs

c)

A shortage because Qs exceeds Qd

d)

A surplus because Qd exceeds Qs

34.

After the price ceiling is introduced, what is the effect?

a)

Producers sell less at a lower price

b)

Producers sell more at a lower price

c)

Decrease in economic welfare

d)

Increase in economic welfare

35.

A _______ is a legislated minimum price that sellers are allowed to charge in the market

a)

Price floor

b)

Price ceiling

c)

Equilibrium price

d)

Surplus

36.

Price ceilings are created to benefit ______

a)

Both producers and consumers

b)

Producers

c)

Consumers or producers, it depends on the situation

d)

Consumers

37.

Price floors are created to benefit ______

a)

Both producers and consumers

b)

Producers

c)

Consumers or producers, it depends on the situation

d)

Consumers

38.

Using the diagram, a price floor might do what?

a)

Consumer surplus and producer surplus decrease by the same amount

b)

Consumer surplus increase by more than producer surplus decreases, causing a deadweight loss.

c)

Consumer surplus decreases by more than producer surplus increases, causing a deadweight loss.

d)

Consumer surplus and producer surplus increase by the same amount

39.

CS Before Tax

(a)  

40.

PS Before Tax

(a)  

41.

CS After Tax

(a)  

42.

Tax Revenue for Government

(a)  

43.

PS After Tax

(a)  

44.

Amount of tax revenue producers pay

(a)  

45.

What area represents producer surplus in the graph shown here if this market is in equilibrium?

a)

P2MP0

b)

P4MP2

c)

LMN

d)

P4PLN

e)

P0MP4

46.

Consumer surplus is the buyer's willingness to pay minus the seller's cost.

a)

True

b)

False

47.

Consumer surplus decreases when the price in that market increases.

a)

True

b)

False

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